Chase will ‘significantly reduce’ real estate – how that impacts Columbus

COLUMBUS (COLUMBUS BUSINESS FIRST) — JPMorgan Chase isn’t going back to the office in the way that it used to, and that could have huge implications for Columbus.

In his annual letter to shareholders, JPMorgan (NYSE:JPM) CEO Jamie Dimon wrote that the pandemic has permanently changed the way the bank looks at its real estate after sending much of its workforce home, including many of the 18,596 who work for the bank in Central Ohio.

Local spokespeople declined to comment further, but Chase, the city’s fourth-largest employer, owns or leases 3 million square feet of office space here, according to information from Colliers. That means any changes would likely have a ripple effect.

Working and not working

“Remote work will change how we manage our real estate,” Dimon wrote. “We will quickly move to a more ‘open seating’ arrangement, in which digital tools will help manage seating arrangements, as well as needed amenities, such as conference room space.

“As a result, for every 100 employees, we may need seats for only 60 on average. This will significantly reduce our need for real estate.”

While avoiding specifics, Dimon wrote that perhaps 10% of his 250,000 employees would work remotely full time. He said some employees would work under some sort of hybrid model.

Dimon noted in his letter that the bank was surprised at how easily it could transition for those who work in call centers, operations, and trading and investment banking, all of which have some big operations in Central Ohio, principally at the McCoy Center office complex near Polaris. That site is home to about 10,000 employees.

He’s previously said remote work causes a “loss of creative combustion.” In the letter, he pointed out its weaknesses – Zoom meetings slow down decision making and Chase’s apprenticeship model has suffered.

But culture is his main concern. Remote work is successful, he said, when people know each other.

“(R)emote work virtually eliminates spontaneous learning and creativity because you don’t run into people at the coffee machine, talk with clients in unplanned scenarios or travel to meet with customers and employees for feedback on your products and services,” Dimon wrote.

City advantages

Before the pandemic, JPMorgan had been considering its options to move more of its workforce out of New York City, where it has 37,000 employees, according to media reports. Dimon reiterated in the letter that its new New York City headquarters would still employ 12,000 to 14,000 worker.

But long-term plans to shift the workforce could still be advantageous for cities such as Columbus. The cost of living here is 25% lower, including housing that is nearly half the cost, according to SmartAsset. Chase recently spent $200 million on the renovation of the 2-million-square-foot McCoy Center complex in Polaris, and more recently has added solar panels, a sign of long-term interest there.

But the bank’s other real estate in the city includes 504,000 square feet at 3415 Vision Dr. near Easton Town Center, 363,000 square feet at 800 Brooksedge Blvd. in Westerville, 40,000 square feet at 100 E. Broad St. in Columbus, and 5,000 square feet at 460 Polaris Parkway, according to Colliers data. It’s unclear what the future could hold for these properties.

Chase gradually has changed its local footprint – most recently giving up the 72,000-square-foot office at 1000 Polaris Parkway, formerly housing some of its 5,000 technologists.

At the same time, the pandemic could create new jobs. A new virtual banking hub Chase announced last year will add 300 jobs including in Columbus.

Big fish

Many major companies have yet to lay out specific long-term strategies for how they return to the office.

So many likely will watch how Chase approaches things. Columbus-based Nationwide was one of few others to dip a toe in the water – it closed some smaller offices so that about one-third of its 28,000 employees work from home fulltime. CEO Kirt Walker has estimated that will rise to nearly half its workforce in the future.

Despite these signs, prognosticators remain optimistic that the office has a future.

“There’s a balance to be had because closing the office saves money and cost is king,” CBRE economist Spencer Levy said in a recent gathering of Columbus brokers. “But it doesn’t stay king. People go to the office because they want to, not necessarily that they need to. That’s where you build the culture.”

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